1"The procedural chart some companies used in the 1970s to design a coffee maker was complicated enough to put a rocket on the moon," says Steve Walleck, head of McKinsey & Co., the management consultancy. Now all that is changing, and not only in information technology, electronics and cars sectors in which the Japanese challenge is greatest. Whether the prime competitor is from Japan or not, and whether the goal is to be first-to-market or a "fast follower," Western companies in industries as diverse as aircraft, food, drugs, and heavy engineering are also rushing to join the "product race."
IBM nearly halved the personal computer industry's standard product development cycle of two years when it entered the market in 1981. It has since cut development times for typewriters and printers, as well as for its standard computers.
Rolls Royce, the aero engine maker, has pruned the development-to certification cycle on turbine blades from more than five years to as little as two and a quarter.
Procter & Gamble has more than halved the development times for many of its household products.
Allen-Bradley, a leading U.S. maker of engineering components, has cut the development cycle for electrical contractors from seven years to just two.
General Motors, Ford, Volkswagen, and other mass motor manufacturers are starting to chase the Japanese industry's development time, currently at an average of three-and-a-half years and falling. They have a lot of catching up to do: the average U.S. time is five years, and some Europeans are even slower.
All these examples have one common characteristic: "scrum and scramble." "Scrum and scramble" is a variant of what is becoming known among insiders as the "rugby team" approach to product development. It has been practiced for over a decade by entrepreneurial Japanese companies such as Canon, Honda, and Sony, in preference to the more sluggish "relay race" tactics traditionally used by most of their bureaucratic competitors in Europe and the United States; only a few Western pioneers, such as Hewlett-Packard, are practiced users of "rugby" tactics.
In the traditional Western "relay race," one group of functional specialists "passes the baton to the next group," says Professor Hirotaka Takeuchi of Japan's Hitotsubashi University, who is one of the few academics or consultants to have studied Japanese product development in depth. Says Takeuchi, "The project goes sequentially from phase to phase: concept development, feasibility testing, product design, development, production design and tooling, pilot production, and full production." The various functions are compartmentalized from each other, "with different specialists carrying the baton at different stages of the race."
In the new "rugby approach" pressure is exerted on the engineers to do more group work in which specialists in marketing, industrial design, engineering and manufacturing work together on project teams.
There is a great temptation to suggest that this shift away from sequential attention to the various tasks of product development and marketing will render obsolete the conventional hierarchical structure of a business enterprise in favor of Apple founder Steve Jobs's "loose group of people." This type of organizational design is said to promote creativity and originality which, when coupled with organizational identification and dedication, leads to superior performance.
John Sculley pulled together Apple's fragmented product development program, which at times bordered on the chaotic, setting his engineers tough deadlines for new products. He merged and centralized Apple's different product divisions, which often operated as though they were autonomous companies. He laid down formal reporting procedures and strict financial controls. And to ram the message home, he closed plants, shed almost a quarter of the staft', and shook up his top management.
Sculley says, a little self-consciously, that the famous Apple style is alive and well. "We still have a great emphasis on having a work environment that is fun. We still do not have formal dress codes. We still have beer busts on Friday afternoon and parades and celebrations when we pass major milestones."
Yet beneath this California babble, Sculley has a deeper point to make. He believes that the lack of structure before he arrived, far from being a symptom of creativity, hindered innovation across a broad front. "There were great problems getting our products out of the door till we reorganized. We have increased the likelihood that innovative ideas will turn into shippable products." Citing People's Express and Atari as examples, Sculley argues that few U.S. companies have managed to combine their original entrepreneurial drive with the structures needed as they grew to that sort of size.
Unisys is another company that has been restructured. The aim of the new management structure, says Mias van Vuuren, Unisys's marketing director for Europe, is to make sure that centrally determined European strategies are hammered home at the local level.
Each national company formed by integrating the old rival teams is organized to sell machines in four broad product categories. These businesses-financial services, public sector and transportation, industrial and commercial, and indirect sales-are all fast-growing segments through which [Unisys's CEO] Blumenthal believes that the company can secure substantial market shares by concentrating its sales resources.
To bring this concentrated effort to bear, the manager of each of the product lines reports to a national chief executive, but also has a line of responsibility back to a headquarters-based European marketing manager, who is charged with reviewing and monitoring progress in each product area.
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